Whether you’re a sole trader or a landlord, transitioning to Making Tax Digital for ITSA can feel overwhelming. However, with early preparation, the shift can be smooth and stress-free. Follow this step-by-step plan to get ready.
Step 1: Check Your Income Threshold
Determine whether you’ll be required to join MTD ITSA in April 2026 or April 2027. This depends on your total qualifying income.
Step 2: Review Your Current Record-Keeping System
If you’re still using spreadsheets or paper records, now is the time to transition to software-based bookkeeping.
Step 3: Choose MTD-Compatible Accounting Software
Popular choices include:
- Xero
- QuickBooks
- FreeAgent
- Sage
- Coconut (for sole traders)
Make sure the software is approved by HMRC for MTD ITSA.
Step 4: Digitise Your Receipts & Records
Start keeping digital copies of income, expenses, invoices, and receipts. This will become a requirement under MTD.
Step 5: Practice Quarterly Submissions
Some software already allows test submissions. Getting comfortable now will save stress later.
Step 6: Consult Your Accountant If you have an accountant, work with them to upgrade processes and ensure you’re ready for the change.